OpenAI intends to introduce an ad-supported version of ChatGPT, which could pose a significant challenge to Google's advertising revenue. Analysts, including those from Bank of America, express concern that major advertisers may shift their budgets to ChatGPT if it gains popularity. OpenAI reported an increase in ChatGPT users and substantial annual revenue. However, adding an advertising component could risk the user experience. Analysts suggest Google has an opportunity to refine its search offerings to maintain competitiveness amid this emerging threat.
"If OpenAI's ad-supported tier gains traction, there could be ad budget shift concerns for major incumbent platforms (primarily Google Search) affecting their growth outlook," said Bank of America analyst Justin Post in a report.
"While Google search continues to defy the skeptics, the true challenge to Google's business model is not here and now. Google has a window to challenge their new rival and innovate their search products to stave off competition and limit future risk." - Michael Nathanson.
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